CHANGES IN CHINA'S WAGE STRUCTURE

Using a national sample of Urban Household Surveys, we document several profound changes in China's wage structure during a period of rapid economic growth. Between 1992 and 2007, the average real wage increased by 202%, accompanied by a sharp rise in wage inequality. Decomposition analysis rev...

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Bibliographic Details
Published in:Journal of the European Economic Association 2014-04, Vol.12 (2), p.300-336
Main Authors: Ge, Suqin, Yang, Dennis Tao
Format: Article
Language:English
Subjects:
Capital stocks
China
E24
Economic growth
Economic indicators
Economic sectors
Economic theory
Educational attainment
Employee efficiency
Employment
Human capital
Income inequality
J31
Labor markets
Middle schools
O40
Private sector
Production functions
Real wages
Rural-urban migration
Studies
Technological change
Wage differential
Wage differentials
Wage structure
Workforce
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Summary:Using a national sample of Urban Household Surveys, we document several profound changes in China's wage structure during a period of rapid economic growth. Between 1992 and 2007, the average real wage increased by 202%, accompanied by a sharp rise in wage inequality. Decomposition analysis reveals 80% of this wage growth to be attributable to higher pay for basic labor, rising returns to human capital, and increases in the state-sector wage premium. By employing an aggregate production function framework, we account for the sources of wage growth and wage inequality amid fast economic growth and transition. We find capital accumulation, skill-biased technological change, and rural–urban migration to be the major forces behind the evolving wage structure in urban China.
ISSN:1542-4766
1542-4774
DOI:10.1111/jeea.12072